A wave of layoffs hits telecom sector

We were not given termination letters because that would entitle us to 3 months salary: Etisalat employee

Soon after the Supreme Court cancelled 122 2G licences and ordered a fresh auction, UAE-based Etisalat DB sent out a communication to about 35 senior employees saying they were being considered for postings in Nigeria and Tanzania. The remaining 450-odd employees heard nothing at all.

Unpleasant signs of uncertain times were everywhere. ?There was no drinking water in the office, no cleaning, no housekeeping and no Internet connectivity,? said a mid management-level employee at the company?s Mumbai office, who has since moved on to another job.

?We were not given termination letters because that would entitle us to three months? salary as per our contracts,? said the former Etisalat DB employee. ?So, a situation was created in which employees would quit on their own.?

The executive said that on March 25, the HR head told them that the company had filed for liquidation and would not be able to pay any more salaries. Salaries of March ultimately came after employee representatives requested Bombay High Court to intervene. But no one is betting on the future. Everyone is desperately looking for jobs. The executive said he is among a lucky few who have found one.

A large number of professionals ? many in their 40s with children in schools and home loans to pay ? are battling a rising wave of layoffs in India?s telecom sector, triggered by the uncertainty arising out of the apex court?s February 2 order cancelling 2G licences awarded by former telecom minister A Raja in 2008.

On April 4, the Supreme Court dismissed a plea for a review of its judgment filed by the affected telecom firms.

There aren?t many new jobs going around. Established players like Bharti Airtel, Vodafone and Tata Teleservices are downsizing to shore up revenue amid eroding business sentiment and strained margins.

Around 600 employees of Uninor will gather at Jantar Mantar in New Delhi tomorrow with their families to draw the government?s attention to the fact that their livelihoods depend on the continuity of Uninor?s operations. They want the government to ensure that Uninor stays in business until the fresh round of auctions.

Uninor, a joint venture between Unitech Ltd and Telenor group, lost 22 licences as a result of the Supreme Court order. Telenor and Unitech have been locked in a dispute that the Company Law Board has now allowed to go into arbitration in Singapore.

STel (which lost six licences) and Etisalat DB (which lost 15) have announced plans to wind up operations, and are in the process of laying off almost all their employees. Etisalat filed for liquidation on March 12 and stopped operations from March 31. STel has asked most of its 400 workers to leave after paying them two months? advance salary, industry sources said.

In an email response to queries by The Indian Express, an Etisalat spokesperson said Tuesday: ?We may be in a much better position to answer after tomorrow?s hearing in Bombay High Court.?

An STel spokesperson admitted that following the SC verdict, all employees except the few required for ?necessary work? have been told that since the company would wind down operations by May-end, they would no longer be required. The spokesperson insisted that no ?sudden shock? has been given to any employee.

Loop Telecom (21 licences) has announced it?s shutting down in all circles except Mumbai (where operations are under Loop Mobile), and asked employees to look for other jobs.

?Operations can?t continue beyond June 1. Employees have been asked to look for alternate avenues for which the company will give them sufficient time,? said a senior Loop official who declined to be named.

The company spokesperson said, ?If the licences are cancelled then appropriate action will be taken. Whoever can be absorbed will be absorbed for operations in Mumbai circle under Loop Mobile.?

Industry analysts said nearly 25,000 individuals were employed with the companies linked to the 122 cancelled licences. Uninor alone employed some 17,500, and Sistema Shyam Teleservices (SSTL) another 3,500.

Uninor and SSTL have so far maintained that their business continues as usual. A Uninor spokesperson said: ?The plan and intention is for Uninor operations to continue. We are also taking all routes available to us to secure our long term future. This includes approaching the Hon?ble Supreme Court to instruct the DoT to conclude auctions within the June 2 deadline, and participating actively in the TRAI consultations on the design of these auctions.?

He added, ?There is no downsizing conducted or planned on account of the SC verdict. Not only does the company continue to pay salaries, it has also concluded the annual appraisal process one month in advance.?

The SSTL spokesperson said, ?SSTL is committed to India. However, there is urgent need to remove uncertainty being faced by the entire telecom sector.?

Players like Airtel, Tata Teleservices and Reliance Communications are estimated to have laid off close to 6,000 people over the last one year. Suddenly, the sector has too few jobs and too many professionals, a far cry from two years ago when telecom was the sunrise sector in terms of employment.

Tata has merged its CDMA and GSM divisions and rationalised over 700 positions. Bharti Airtel has shed over 1,000 positions in a comprehensive restructuring. Vodafone, Idea, Aircel and Reliance have frozen hiring even for existing vacancies, industry sources said. The Indian arm of Swedish telecom gearmaker Ericsson is learnt to be redeploying staff, and over 20 executives have reportedly been fired for non-performance.

?It is going to be very tough for employees as established players downsize,? said Romal Shetty, ED and head, telecom practice, at KPMG. ?While senior-level employees are looking at jobs overseas and considering starting something of their own, a lot of mid- and junior-level employees are looking for jobs in the retail and IT sectors.?

Industry insiders said most employees with these companies were hired at very high salaries in 2008, when the sector was booming. ?At the senior manager level there is always a shortage of talent, and good senior employees may not find it tough, but it may be some time before the others are absorbed,? said E Balaji, MD & CEO of MaFoi Randstad.

Some industry observers say that when the spectrum auctions happen, there is a good chance that winners will look to scale up operations, and look for employees. That may be the silver lining but as of now, the dark cloud is only spreading.

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First published on: 18-04-2012 at 09:49 IST